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2 July 2014 | Will Green
The UK government has unveiled a new payment by results (PbR) strategy to be used in the distribution of aid funding.
The Department for International Development (DFID) already uses PbR in some of its work but it now intends to roll it out across all programmes to “drive greater transparency and increased value for money”.
Two main types of PbR will be used: one for payments from funders to partner governments, known as “results based aid”, and another for payments from funders or governments to service providers, called “results based financing”. DFID is also exploring how “development impact bonds” could be used to pay private sector investors on the basis of delivery of results.
International development secretary Justine Greening said: “DFID is on an important journey, changing not only the type of development assistance we are delivering, but also how we deliver it. Moving towards smarter aid has seen us focus more on jobs and growth, building up developing countries’ economies to help them defeat poverty.
“For too long however DFID has accepted the bulk of the risk across our programmes and payment by results will help to share risk and radically rebalance accountability. As we encourage developing countries to operate in a more business-like way, it makes sense that DFID takes a tougher, more business-like approach by requiring results up front, before payment is made."